4 Signs It's Time to Fire Your Financial Advisor (2024)

A good financial advisor acts as a fiduciary who can help you with various financial tasks such as estate planning and investing. If your financial advisor is not meeting your expectations, it might be time for a new one.

Breaking up can be hard to do. That’s particularly true when it comes to your financial advisor. After all, they know not only everything about your finances but also your dreams and goals. While firing your financial advisor is never easy, sometimes it's necessary. From being unavailable to not keeping your goals in mind, here's a look at four reasons to fire your financial advisor.

Key Takeaways

  • You should always reach your financial advisor or at least hear back from them promptly.
  • A financial advisor should be able to clearly explain what they recommend for your finances.
  • It's important to read your financial statements every quarter and be ready to ask your advisor questions.
  • A good financial advisor will have your best financial interests at heart and articulate why they recommend one specific action over another.
  • Financial advisors should be able to help you plan for life milestones like retirement.

1. Your Financial Advisor Ignores You

The cornerstone of any relationship is communication. Without it, it's easy for things to be miscommunicated and for anger to brew, culminating in distrust. Poor communication can quickly sour a relationship, especially when money is involved, which is why a quality financial advisor will lay out the ground rules in terms of how often and when they will check in with you.

If your advisor, all of a sudden, stops returning your calls or emails or takes too long to get back to you, that could be a sure-fire sign you may need a new advisor. After all, people turn to financial advisors for hand-holding, and if you aren't getting that, why are you paying the person, to begin with?

2. Financial Advisor Talks at You, Not With You

Your financial advisor has to know a lot about you, your risk tolerance, investment horizon, and aggressive or conservative nature to achieve your financial goals. They won't be able to glean any of that knowledge without sitting down and talking to you, and more importantly, listening to you.

If your financial advisor spends your meetings telling you what to do without hearing your goals, dreams, and fears, then they don't have your best interest in mind. If your financial advisor is increasingly doing that, it may be best to go shopping for a new one.

3. Too Much Jargon And Not Enough Information

Investing can be complicated and confusing for many people, which is why there are so many financial advisors out there. Not everyone is going to do a good job explaining what you are investing your money in.

Financial advisors that throw jargon your way but can't explain in laymen's terms what's going on should throw up a red flag with you. Either the financial advisor doesn’t want to or can't give you the necessary information on your investments. Either way, it's not good for you and your financial well-being.

Your financial advisor should never guarantee high returns on investments, or pressure you into investments you cannot afford. Always make sure your financial advisor is a fiduciary.

4. Investments Are Too Expensive

One of the quickest ways to see your returns diminish is to pay too much for fees and expenses. While it’s the financial advisor’s job to match your investments with your goals and expectations, they should be keeping an eye on expenses. You don’t want to end up in a situation where your advisor is steering you toward investments with a hefty commission, nor do you want to be paying an excessive amount for a fund when there is a similar investment available for less.

An excellent way to tell how much your fees and expenses are is to look at your monthly or quarterly statement. See a high amount, and it’s time to call your advisor on it. If you can’t rectify the situation or there isn’t a good reason why the expenses are so high, it’s a sign you may need to fire your financial advisor.

The Bottom Line

Financial advisors play an essential and necessary role in steering regular people into suitable investments. But these professionals are only as good as the service they provide their clients.

If your financial advisor isn’t paying enough attention to you, isn’t listening to you, or is confusing you, it may be time to call it quits and find a new advisor who is willing to go the extra mile to keep you as a client.

Financial Advisor FAQs

How Do You Become a Financial Advisor?

Most financial advisors hired by brokerage firms must have an undergraduate degree. In addition, financial advisors who want to get ahead in their career must study for, and pass, their licensing exams to obtain a Series 7 license, along with others. Experience in a specific area of finance, like investments, is important as well.

What Does a Financial Advisor Do?

Financial advisors do all kinds of work, depending on their specialty area, from managing stock portfolios to advising on taxes, estate planning, and other forms of personal finance.

How Do You Find a Financial Advisor?

There are many ways to find a financial advisor. You can start a search online, contact the National Association of Personal Financial Advisors, or ask your friends, family, and work colleagues for recommendations.

How Much Does a Financial Advisor Cost?

How much a financial advisor will cost depends on a few factors, including the type of advisor and the assets you need help managing. There are three kinds of financial advisors, fee-based, fee-only, and commission-based. Some advisors charge a percentage of the assets they manage. For example, if an advisor charges 0.3% of $50,000 in personal assets, you would pay $150 a year.

Some financial advisors charge upwards of $400 an hour, but it depends on the advisor and what you ask them to do. A financial advisor isn't necessarily cheap, but they can be affordable, not only for the wealthy. In the end, a financial advisor should help you save or grow your money.

How Much Do Financial Advisors Make a Year?

The median annual wage for personal financial advisors was $94,170 in May 2021 (the most recent figures as of May 2023), according to the U.S. Bureau of Labor Statistics.

4 Signs It's Time to Fire Your Financial Advisor (2024)

FAQs

4 Signs It's Time to Fire Your Financial Advisor? ›

On the other hand, fee-based or commission-based compensation structures can both be financial advisor red flags. These advisors may earn part or all of their compensation in sales commissions. In other words, they may be more incentivized to sell products than give advice.

What is a red flag for a financial advisor? ›

On the other hand, fee-based or commission-based compensation structures can both be financial advisor red flags. These advisors may earn part or all of their compensation in sales commissions. In other words, they may be more incentivized to sell products than give advice.

How do I politely fire my financial advisor? ›

You can either call or email your advisor - but letting them know you're leaving and why is a nice thing to do. Your new advisor will actually do all the work of transitioning the accounts for you.

When should you dump your financial advisor? ›

But these professionals are only as good as the service they provide their clients. If your financial advisor isn't paying enough attention to you, isn't listening to you, or is confusing you, it may be time to call it quits and find a new advisor who is willing to go the extra mile to keep you as a client.

How to dump a financial advisor? ›

In most cases, you simply have to send a signed letter to your advisor to terminate the contract. In some instances, you may have to pay a termination fee.

What is unprofessional behavior for a financial advisor? ›

Unethical financial advisors usually have warning signals including inconsistent reporting to clients, product pushing, and guaranteeing future results. Ethical financial advisors prioritize learning about your personal history, explaining unfamiliar financial matters, and planning for their succession in they retire.

How long should you keep a financial advisor? ›

"If judging performance only, clients need to give an advisor three to five years minimum, and realistically, five-plus is probably better," said Ryan Fuchs, a certified financial planner with Ifrah Financial Services. "It may take several years before you can truly see how an investment strategy will work.

How often should you hear from your financial advisor? ›

“There are years you talk to your adviser every month, and there are years when a single check-in is completely appropriate. I think 2-3 times a year is a good average,” says Jen Grant, a financial planner at Perryman Financial Advisory.

What happens when you fire a financial advisor? ›

Some advisors may impose penalties for terminating an annual contract early. Others may prorate their annual fee if you terminate the relationship mid-year. Sales charges. Some mutual funds impose sales charges when you sell shares before a specified time frame.

What to do if you are unhappy with your financial advisor? ›

You're paying for a professional service, and if you're not satisfied, it's time to make a change. Notify them, on your terms: While it's not technically required, you should politely and respectfully inform your advisor that you're making a change. Keep it brief and professional.

How much does it cost to fire a financial advisor? ›

The only transfer fees are typically what the other custodian charges. Often, it's $50 to $150 per account. Your new financial advisor should be able to help with the transition. Lean on them and their expertise to guide you through the process.

How often do people switch financial advisors? ›

How often do people switch financial advisors? People often switch financial advisors when they experience significant life changes or feel their current advisor is no longer suitable, but there is no set frequency for making such a change.

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